Prosecutors said Madoff violated bail by mailing $1 million in valuables to friends, family. Investors allegedly duped by Madoff are furious that he remains in his lush N.Y. digs, legal experts say.

NEW YORK — A federal judge rebuffed a request to revoke Bernard L. Madoff's bail Monday despite public anger that the former money manager is not in jail but in his upscale Manhattan apartment under house arrest.

Prosecutors last week asked that Madoff, who is accused of bilking investors in a $50-billion worldwide Ponzi scheme, be jailed, saying he had violated the terms of his bail by sending $1 million in valuables -- including Tiffany and Cartier watches, an emerald ring, necklaces and cuff links -- to family and friends.

U.S. Magistrate Judge Ronald Ellis rejected the request, saying Madoff was no more of a flight risk than before. But the judge tightened the conditions of the 71-year-old defendant's bail, including requiring him to compile an inventory of valuable portable possessions for a security company to keep tabs on and ordering that his outgoing mail be inspected.

The decision frustrated aggrieved Madoff investors.

"It's disconcerting to say the least that he's giving the benefit of the doubt to Madoff when our clients didn't get much benefit," said John Rich, a New York attorney who represents charities and individuals that have reported losing money invested with Madoff.

"It's certainly not a typical case, and one would have thought that given the magnitude of it that there would be a lot of reluctance to allow him any more freedom than he has to have," he added.

The government initially hadn't opposed bail for Madoff and even agreed to his securing only two of the required four co-signers on his $10-million personal-recognizance bond. The about-face by prosecutors could reflect pressure from Madoff investors and the court of public opinion.

"Now that there's been this huge public outcry and the U.S. attorney's office miscalculated public sentiment, they're now trying to backtrack," said New York defense lawyer Bradley Simon.

Prosecutors also were probably incensed that Madoff would flout the terms of his bail after they had been so accommodating, said Chris Clark, a white-collar criminal defense attorney at Dewey & LeBoeuf in New York.

"This is about 'How the hell could you do this to us when we let you out?' " Clark said.

Legal experts described the judge's ruling Monday as appropriate.

"It may not be popular. It's not punishment. It doesn't inflict enough pain on Madoff for victims to be happy," said Steven D. Feldman, a white-collar defense attorney at Herrick Feinstein in New York. "But that's not what bail is about."

The government had faced a challenge in convincing a judge that mailing a few items warranted locking up Madoff.

"Nothing significant had changed, so why should the judge change his position on bail?" said Joel Cohen, a defense lawyer at Clifford Chance in New York.

A spokeswoman for the U.S. attorney's office declined to comment.

Madoff's lawyer, Ira Sorkin, said, "The decision speaks for itself, and we intend to comply with the judge's order."

Separately, the two sides agreed Friday to postpone until next month a deadline for a grand jury to consider an indictment in the case.